While unproven biotechnology firms almost always carry significant risks, small-cap biotech stocks in particular typically impose jaw-dropping volatility. Along with the usual risk of clinical disappointments or outright failures, these speculative enterprises are obviously less funded. As a result, investors can be taken on a wild ride.

Nevertheless, biotech penny stocks – or more generally biotech stocks under $10 – offer massive, possibly life-changing upside potential. Due to their underlying unpredictability, when these enterprises do occasionally hit one out of the park, their shares can skyrocket. So, astute investors will throw some pocket change at this subsegment because your money may go very far.

At the same time, you can also implode your portfolio if you’re not careful. Again, the key phrase here is pocket change. If you acknowledge the risks and are ready to roll the dice, these biotech stocks with huge potential just might fit the bill.

ProPhase Labs (PRPH)

Founded in 1989, ProPhase Labs (NASDAQ:PRPH) is a next-generation biotech, genomics, and diagnostics company. It specializes in its whole genome sequencing solutions while also developing diagnostic platforms and therapeutics for cancer. Notably, ProPhase features several high-level innovation partners, including the Mayo Clinic, Dana-Farber Cancer Institute, and Stanford University.

While small-cap biotech stocks carry an extremely high-risk reputation, ProPhase’s financials look rather inviting. For one thing, the company features a robust balance sheet. Notably, its cash-to-debt ratio pings at 2.51, ranked above 64.19% of companies listed in the drug manufacturing industry. Operationally, Prophase features a three-year book growth rate of 59.4%. On the bottom line, its net margin comes out to 15%, above nearly 82% of sector players. Finally, H.C. Wainwright analyst Yi Chen pegs PRPH a buy. The expert forecasts a $15 price tag, implying 94% upside potential.

Zomedica (ZOM)

Perhaps earning the label of top biotech stocks in 2023, Zomedica (NYSEAMERICAN:ZOM) is one of the riskiest trades you can make. Trading hands at 20 cents a pop, you don’t want to use anything more than change under the sofa to bet here. However, on a positive note, ZOM stock gained nearly 27% of equity value since the beginning of the year.

Fundamentally, Zomedica intrigues because of its core business of advancing animal health and veterinarian success. Its main product is Truforma, an in-clinic biosensor testing platform. Encouragingly, the American Pet Products Association reported that total U.S. pet industry expenditures amounted to $136.8 billion last year. This compares very favorably to the $123.6 billion posted the year prior.

However, the underlying financials reflect more of what you find with small-cap biotech stocks, particularly Zomedica’s negative profit margins. Nevertheless, investors shouldn’t ignore the company’s robust balance sheet. Lastly, Dawson James analyst Jason Kolbert pegs ZOM a buy. The expert forecasts shares hitting 44 cents, implying nearly 117% upside potential.

MaxCyte (MXCT)

Based in Maryland, MaxCyte (NASDAQ:MXCT) states that it spent over 20 years perfecting the art of cell engineering. In particular, its ExPERT instruments offer best-in-class electroporation technology, which combines high efficiency and cell viability with seamless scalability. Presently, MXCT trades hands at a few cents below $5. Since the start of this year, shares declined by over 9%.

An intriguing speculative idea among small-cap biotech stocks, MaxCyte’s financials offer a mixed bag. On the positive side, it enjoys solid stability in the balance sheet. For example, its cash-to-debt ratio pings at 14.13, ranked better than 70.41% of competitors in the medical devices sphere. Also, MXCT trades at 1.91 times its book value, which is rather undervalued.

On the less-encouraging side, MaxCyte suffers from negative profit margins. As well, its three-year free cash flow (FCF) growth rate also prints red ink. Then again, that’s normal for biotech penny stocks. In closing, analysts peg MXCT as a unanimous strong buy. Their average price target stands at $12.07, implying over 160% upside potential.

CorMedix (CRMD)

Hailing from New Jersey, CorMedix (NASDAQ:CRMD) bills itself as a pharmaceutical company that develops and commercializes therapeutic products for the prevention and treatment of life-threatening conditions and diseases. It’s one of the micro-capitalization examples of best biotech stocks under $10. Currently, it trades hands for $4.63 and features a market value of just under $210 million.

On paper, those stats don’t sound like much. However, CorMedix brings some serious financial clout to the table. Notably, the company commands a cash-to-debt ratio of 73.22, outpacing 74.63% of other biotech enterprises. Also, its equity-to-asset ratio pings at 0.89, above the sector median of 0.71.

However, it’s not without problems. Similar to other small-cap biotech stocks, CorMedix suffers from deeply negative profit margins. Also, it’s overvalued relative to tangible book value. Still, covering analysts peg CRMD as a consensus moderate buy. Their average price target lands at $14.50, implying over 240% upside potential.

Sensus Healthcare (SRTS)

Headquartered in Boca Raton, Florida, Sensus Healthcare (NASDAQ:SRTS) easily ranks among the riskiest small-cap biotech stocks to consider. Since the Jan. opener, SRTS fell nearly 34%, a simply staggering figure. Overall, Sensus has failed to generate sustained positive traction. In the past five years, SRTS slipped almost 23%.

Nevertheless, SRTS could also make a case for biotech stocks with huge upside potential. Fundamentally, Sensus draws attention for its Superficial Radiation Therapy, which requires minimal to no cutting. As well, without scarring and no downtime, the SRT tech may help those dealing with non-melanoma skin cancer or keloids.

Financially, Sensus benefits from a robust balance sheet, solid sales growth, and an excellent trailing-year net margin of 54.44%. However, being priced at only 3.21 times trailing earnings, Gurufocus raised concerns about SRTS being a possible value trap. For the undeterred, analysts peg SRTS as a unanimous strong buy. Their average price target hits $16.83, implying nearly 260% upside potential.

Ocuphire Pharma (OCUP)

Based in Farmington Hills, Michigan, Ocuphire Pharma (NASDAQ:OCUP) is a clinical-stage ophthalmic biopharmaceutical company focused on developing and commercializing therapies for the treatment of refractive and retinal eye disorders. On paper, OCUP represents one of the more promising small-cap biotech stocks to buy. Since the beginning of Jan., shares jumped over 47%.

Even more impressive, in the trailing year, OCUP returned shareholders nearly 122% of equity value. However, it’s not just clinical progress undergirding Ocuphire. Rather, it enjoys strong financial metrics as well. For instance, it incurs zero debt, affording the enterprise incredible flexibility, especially at this juncture. Also, its trailing-year net margin pings at nearly 45%, outpacing 95.91% of the competition. Further, its return on equity soars to 79.71%, reflecting an extremely high-quality business.

Lastly, analysts peg OCUP as a consensus moderate buy. Their average price target comes out to $19, implying almost 268% upside potential.

Matinas BioPharma (MTNB)

Hailing from New Jersey, Matinas BioPharma (NYSEAMERICAN:MTNB) may intrigue speculators as one of the biotech penny stocks. According to its website, Matinas enables safe, intracellular, and even orally-administered delivery of a broad range of drug therapies, including small molecules, drugs with blood level-limiting toxicities, nucleic acid polymers, proteins, peptides, vaccines, and gene editing technologies.

Trading hands for only 61 cents and featuring a market cap of just over $133 million, MTNB is not appropriate for risk-averse investors. However, for those seeking small-cap biotech stocks with massive upside potential, MTNB could fly dramatically higher. Financially, it offers a decent profile, particularly an Altman Z-Score of 5.08 that reflects stability and low bankruptcy risk.

Operationally, its triple-digit three-year revenue growth rate impresses, though it’s probably not sustainable. As with other speculative biotechs, you must contend with negative profit margins. Nevertheless, analysts peg MTNB as a unanimous strong buy. Their average price target stands at $3, implying 384% upside potential.

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Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.